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Business
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Commodity Trading
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1. What is the purpose of the Global Incentives for Trading (GIFT) programme?
The Global Incentives for Trading (GIFT) programme, launched in collaboration with the Malaysia Petroleum Resources Corporation (MPRC), is aimed at positioning Malaysia as a regional trading and storage hub for oil and gas.
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2. What is the Labuan international commodity trading business ?
A Labuan international commodity trading business is the trading of physical and related derivatives of petroleum and petroleum-related products including liquefied natural gas (LNG). Labuan international commodity trading companies use Malaysia as their international trading base to undertake international commodity trading business in Labuan IBFC.
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3. How to apply and what are the conditions for licence under the GIFT programme?
The Labuan international commodity trading company (LITC) must have sufficient capital/working funds that commensurate or are in accordance with its operations and activities. Upon licensing, the LITC must ensure the following:
- Indicate clearly on its letterhead, stationery and other documents including signage containing its name that it is licensed as a “Labuan International Commodity Trading Company” under the Labuan Financial Services and Securities Act 2010, together with its licence number
- The business is conducted with proper corporate governance and has a risk management framework in place; and
- Is expected to comply with other requirements of the Labuan Companies Act 1990, the Labuan Financial Services and Securities Act 2010 and other relevant laws, whichever is applicable.
- Indicate clearly on its letterhead, stationery and other documents including signage containing its name that it is licensed as a “Labuan International Commodity Trading Company” under the Labuan Financial Services and Securities Act 2010, together with its licence number
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4. What are the post licensing requirements for an LITC ?
LITC must comply with the following conditions after the granting of its licence and commencement of its business :
- Achieve annual minimum turnover of USD50 million;
- Incur minimum annual business spending of RM3 million payable to Malaysian residents in Malaysian Ringgit; and
- Employ at least three professional traders that fulfill the following requirements:
- The Principal officer or any person performing a senior management function who would be principally accountable for:
- making decisions that affect the whole, or a substantial part of the LITC business;
- implementing and enforcing policies and strategies approved by the LITC’s Board of Directors including Head of Department or any equivalent designated person; or
- internal controls and processes of the LITC.
- These professional traders shall be involved in any one of the following areas:
- Trading;
- Risk Management;
- Procurement; or
- Sales & Marketing.
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5. What are the permitted activities under the GIFT programme ?
The permitted activities include buying, selling and /or broking of physical and related derivative instrument of petroleum and petroleum-related products including liquefied natural gas (LNG).
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6. Can the LITC operate out of Labuan but in Malaysia?
The LITC is allowed to establish its operational office(s) and operate anywhere in Malaysia but it must maintain its registered office in Labuan, which is the office of the Labuan trust company.
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7. What is the Corporate Tax for LITC ?
The LITC is subject to a corporate tax rate of 3% of chargeable profits as reflected in the audited account under the Labuan Business Activity Tax Act 1990 pursuant to the relevant exemption order.
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8. Are there any forms of indirect taxes applicable on an LITC?
Labuan is a duty-free zone, hence there are no indirect taxes.
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9. What are the fees payable by LITCs in Labuan IBFC?
The fees payable are illustrated in the table below:Type of FeesAmountProcessing FeeRM1,000USD350Annual FeeRM40,000USD13,000All licensees are required to pay to Labuan FSA annual licence fees on or before 15 January of each year.
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